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Student Housing Surge

Student housing has become an increasingly attractive asset this past year. Pre-leasing numbers, current occupancy rates and year-over-year growth reached near all-time highs, indicating a robust market. In contrast to the plateaued multifamily housing market, student housing just experienced an average yearly rent surge of around nine percent. This acceleration is likely attributed to higher college enrollment rates and the phase-out of remote learning.

Students who took pandemic gap years are back, and international enrollment is making headway. Enrollment increases are most prominent in notable universities with Division I programs and better brand recognition. Students are back in droves, and it appears they are looking for the quintessential college experience.

The student housing market presents favorable conditions for new supply. In fact, data shows that between 2010 and 2020, universities added 60,000 to 70,000 new beds annually. However, in 2022 the rate declined to only 25,000 beds indicating an undersupplied market, particularly on campuses transitioning from “commuter” to “resident” settings.

A rising trend of commuter-style, city institutions shifting to resident campuses makes them prime candidates for substantial housing growth. Florida International University and the University of North Texas are examples of urban-centered campuses with a large influx of resident students.

While the student housing market presents attractive opportunities, it has its challenges. Local political structures and associated “not in my backyard” sentiments can pose significant hurdles. Developers can’t simply plan to build cookie-cut designs across all college towns and achieve success. Barriers to entry can make development a headache but, at the same time, prevent oversaturation and promote a balanced market.

There is a common misconception that regional banks comprise the majority share of financing for standard multifamily properties. Though, student housing receives a chunkier portion of local financing. Regional banks often have better market understanding and the right connections to pull strings on these types of deals.

Developers may have to get creative with their financing if regional banks are continuously sidelined. It is also worth noting that cap rates for student housing properties are typically 80 to 100 basis points higher than standard multifamily housing. Fortunately for developers, recent net operating income growth in student housing helps offset the valuation impact.

 

Richter, Joseph, et al. “Daily Beat – Commercial Real Estate News.” Daily Beat, 25 Sept. 2019, www.dailybeatny.com.

Spotify. (2023, May 9). Student  Housing: Thriving Market Trends and Investment Opportunities. America’s Commercial Real Estate Show. episode.

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BayBridge Real Estate Capital Announces Addition

NEW YORK, April 10, 2023 – BayBridge Real Estate Capital today announced that Sam Talkow joined the firm as director of equity services.

Talkow has specialized experience in real estate debt and equity originations and underwriting. Throughout his career, he has been involved in high-profile deals, including asset and business risk management and sourcing capital in the real estate and health sectors.

Director of BayBridge Real Estate Capital Jay Miller commented, “Our firm has become known for our ability to put together complex capital stacks for deals across the country. Sam’s institutional background will add to our client services and enable us to expand our expertise on the equity side of our offerings.”

Talkow began his career at the commercial real estate special situations desk of Deutsche Bank. He also worked with Monticello Asset Management, focusing on healthcare investments and eventually assembling the commercial real estate desk.  Most recently Talkow worked at Ladder Capital as a member of their debt and equity originations team.

He holds a master’s degree in real estate and financial investment and analysis from the NYU Schack Institute of Real Estate and a bachelor’s degree in business from Boston University, Questrom School of Business. Talkow is a former member of the Boston University and Israel men’s national lacrosse teams.

He will be based in the firm’s New York City office.

About BayBridge Real Estate Capital

 The BayBridge Real Estate Capital team has a long history of bringing institutional capital to markets across the U.S.

BayBridge helps developers and investors find the financing they need for a broad range of commercial real estate projects, with a focus on structured finance. The firm has offices in Miami, Ft. Lauderdale, Boca Raton, West Palm Beach and New York City.